Re:San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
by kelnos on Wednesday October 14, 2020 @12:53AM
(#24773199)
No, but SF's byzantine planning and approval process jacks up the total cost to build to the point where it doesn't make financial sense to build low-end housing. That means the developer has to increase sale prices in order to turn a profit, which in turn means new landlords need to charge more rent to just break even.
If you consider that a newly constructed 750 sqft 1BR apartment can easily run $800k-$1M, a buyer is looking at $4-5k per month to cover the mortgage, property taxes, insurance, HOA, maintenance, etc. Do you really think a buyer is going to turn around and rent it out for $2k/mo?
For buildings wholly owned by a leasing company, the economics are better, but still not to the point where they're going to rent that out for under $3-4k/mo.
If you consider that a newly constructed 750 sqft 1BR apartment can easily run $800k-$1M, a buyer is looking at $4-5k per month to cover the mortgage, property taxes, insurance, HOA, maintenance, etc. Do you really think a buyer is going to turn around and rent it out for $2k/mo?
For buildings wholly owned by a leasing company, the economics are better, but still not to the point where they're going to rent that out for under $3-4k/mo.